Rising crude oil price has precipitated the slide in shares of tyre, paints and aviation companies, already reeling under the effects of demonetisation. Crude oil, which is a critical input for these sectors, hit an 18-month high on Monday, raising concerns that their earnings could be under pressure in the coming months.

“The increase in crude oil prices has proven to be a double whammy for tyre and paint companies. Their volumes were anyway under pressure due to demonetisation," said G Chokkalingam, founder of Equinomics Research and Advisory .

The price of oil is currently 50% higher than at the same time last year. A rise in crude oil price is a concern for paint companies as they constitute 40-50% of the raw material costs.

Analysts said companies in the tyre replacement sector would also be affected as up to 35% of their raw material depends on crude oil derivatives, especially synthetic rubber.“Commercial tyre manufacturers could end up bearing the cost of the crude oil price increase," said Ashok Ramineni, analyst at Karvy Stock Broking. “This is because of lower pricing power and higher imports from China at lower costs."

JK Tyres and Apollo Tyres are prominent players in the commercial vehicle market and tyre replacement market. These companies had already suffered declines due to demand slowdown post demonetisation. JK Tyres is down 16% since the government announced a ban on notes of Rs 500, Rs 1,000. Analysts said companies which have a strong pricing power like MRF and TVS Srichakra would be able to pass on the price hike to original equipment manufacturers.

Prices of most SUVs were cut between Rs 1.1 lakh and Rs 3 lakh following the implementation of GST, which subsumed over a dozen central and state levies like excise duty, service tax, and VAT from July 1.